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February 2008

Update : Mar. 05, 2008


1.Listing System Adjustments Made in Tandem with the Removal of Restrictions on Overseas Real Estate Investments by Real Estate Investment Trusts (REITs)

Until now, assets eligible to be held by so-called Real Estate Investment Trusts (REITs) have been limited to domestic real estate, as there were issues with overseas real estate holdings in terms of investor protection due to a lack of appraisal methods for such.

In the six and half years since being established by Tokyo Stock Exchange, Inc. (TSE) in September 2001, the REIT market has expanded to include over 40 issues. The TSE believes that this market has a contribution to stabilization of the domestic real estate market, but the restrictions on overseas real estate have inhibited further expansion in terms of the range and appeal of listed products.

With the "Guidelines on Foreign Real Estate Appraisals" drawn up by the Ministry of Land, Infrastructure and Transport last month, the TSE has concluded that concerns about investor protection have been sufficiently addressed, and has decided to lift restrictions on overseas real estate holdings by REITs. The TSE will request REITs to include policies on overseas real estate investment and actual investment and risk management frameworks, etc. in a report the Exchange requires them to file.

The revisions are scheduled to be implemented in May 2008.

2.Changes in Auction Trading Schedule at the End and Beginning of the Year with the Abolition of Half-Day Trading Sessions

The TSE is proceeding with development of the next-generation trading system, aiming for a launch in the latter half of 2009. In September 2006, the TSE drew up the "Outline of Plan for Constructing Next-Generation System" under the policy of simplifying trading rules and business practices as much as possible to reduce the load on the system when it is introduced. According to the plan, concerned parties agreed to consider the abolition of half-day trading sessions at the end and beginning of the year as special system programming is needed for half-day trading sessions. With respect to specific implementation methods, the TSE conducted a survey which included a questionnaire to be filled out by trading participants, and also reviewed the issue at the Market Structure Committee. Based on the results, the TSE has concluded that the last trading day of the year shall be December 30 beginning in 2009 and the first trading day shall be January 4 beginning in 2010. Taking these dates into account, the TSE will revise its auction trading schedule for the end and beginning of the year in order to conduct trading all day. The annual ceremonies on the first and last trading days of the year will continue to be held after half-day trading sessions are abolished.

3.Change in Method for Determining Base Prices of Foreign Stocks Listed on One or More Overseas Stock Exchanges

The TSE will change the method for determining the base price for a foreign stock listed on one or more overseas stock exchanges when setting the daily price limit.

Specifically, the TSE currently refers to overseas market prices immediately before auction trading in the TSE market for foreign stocks begins, translates the prices for foreign stocks and foreign ETFs into Japanese yen, and sets the base price before the start of auction trading. However, in the future, the TSE will refer to overseas market prices upon the completion of TSE's auction trading and, as a general rule, set the base price on the previous day. For stocks with high pricing rates, the TSE will not refer to overseas market prices, but will set the base price as the closing price, etc. on the previous day in the same way as domestic stocks.

Many cases have arisen of investors being unable to place orders until immediately before auction trading begins, but with this change, they will be able to place orders from the previous day, leading to increased usability.

The TSE will revise the system in May 2008.

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